Florida Countersignature Law Declared Unconstitutional

Judge Robert L. Hinkle of the U.S. District Court of the U.S. District Court for the Northern District of Florida has ruled that state's insurance...

October 7, 2003

Judge Robert L. Hinkle of the U.S. District Court of the U.S. District Court for the Northern District of Florida has ruled that state's insurance countersignature law unconstitutional. Hinkle ruled on September 30 that statutes requiring non-resident insurance agents and brokers to have a Florida resident agent "counter-sign" any insurance policies placed by the non-resident, and to pay the resident agent a fee mandated for that service, are unconstitutional. The judge further ruled that statutes prohibiting non-resident agents and brokers from being licensed as surplus lines brokers are unconstitutional.

In his ruling, Judge Hinkle held that "This is one nation with one economy," and that while each state retains its own sovereignty to require licensing of insurance agents, "no state may build a fence at the border to keep out residents of other states or to keep them from competing for business within the state." He went on to say that the effect of the Florida "countersignature" and non-resident surplus lines licensure prohibition was to build such a fence.

What It Means to Agents: Florida, Nevada and West Virginia were the last remaining states to have such countersignature laws. In 1970, PIA adopted a position encouraging the repeal of countersignature laws. In 1986, PIA further amended its position to make clear that we opposed not only countersignature laws, but also the secondary level of insurance statues that while not technically called or classified as countersignature laws, acted in concert to frustrate open non-resident participation. PIA appreciates and is sensitive to the unique market and public policy circumstances in the few states where such laws have remained, but we believe these issues can be solved without countersignature laws.

PIA National is preparing a special report on the this decision because the judge's ruling on the non-admitted aspect affects a wide range of PIA members and their states beyond Florida, West Virginia and Nevada. We expect to have it available later this week.